MS Cross Asset Strategist, Andrew Sheets teaches bears to love the “U”

“…while we frequently hear that the market isn’t prepared for a slow, ‘U-shaped’ recovery, we would be more relaxed: After all, a ‘U’ implies that the worst is behind us, and the rate of change is positive. History suggests that markets routinely look ahead. And for all t…[Read more]

U.S./China trade: Beyond the first order impact, the market is also likely to think about the possible retaliation from China on US companies. From a tech perspective, Apple could be the primary target, although we believe that Apple’s supply chain presence (employing 1-1.5M people in China) may preclude such an action. Given the current e…[Read more]

The policy response has been forceful thus far, with around $2.8 trillion of stimulus on the fiscal front and a $2.4 trillion expansion of the Federal Reserve’s balance sheet. The breadth of measures taken by global central banks to maintain liquidity and flow of credit is also substantial, far exceeding initiatives taken during the 2008-2009 g…[Read more]

Goldman calls the House Dem proposal “largely symbolic” and adds: “Without an obvious forcing event this month, we do not expect Congress to enact the next round of fiscal measures until late June.”

Goldman Sachs: latest sees a bit deeper quarter-on-quarter annualized hit in Q2 (-39% vs. -34%) followed by a faster recovery in Q3 (+29% vs. +19%)

Retail liquidity: less problems than expected
Morgan Stanley built a model to analyze US retail liquidity (of listed companies). Lessons learned: Apocalypse postponed….

1. Almost all companies identified as “at risk” in prior analysis (LB, GPS, PVH, CPRI, HUD, and CHS) have effectively strengthened their liquidity positions to withstand…[Read more]

CITI Quant Stregist: “Using a model based on market flows (large shorts / flow dominated by short covering), we find there is strong evidence that equity markets are indeed in the middle of a melt-up. Risks are now skewed to the downside with the expectation that equities will be 10% lower within 3mths. Meanwhile extending this model to